Mohan Sawhney on Value Propositions

So let’s talk about a very important concept that every marketer every company needs to think about and that is their customer value proposition so a value proposition very simply stated is a promise of value that customers can expect from your product or from your company why do we call it a promise because it is the anticipation of value the customer makes the commitment to you before they actually experience the value so you have to communicate this to your customers in order for them to make that investment in your product or in your brand so when we define abra value proposition we define it more precisely as a set of promises that you make to a defined target audience that are differentiated from other alternatives that customers and customers might consider and are backed up by reasons to believe so let’s break down this definition to interest parts the first element is that a value proposition is a promise it’s a promise of value now this promise means that your product or your brand needs to offer a set of benefits to customers this is the answer to the question what’s in it for me what do I get from your product or your company or your brand these benefits can be of three types they can be functional benefits and these are examples are what features and functionality a product might have their economic benefits and that is time and money and savings that they might get and there are emotional benefits which is a sense of emotions and feelings and affiliation that people might feel with the brand so the promise is really is a combination of these functional economic and emotional benefits now this promise you make needs to be compelling but it also needs to be differentiated from alternatives that customers might consider now what are these alternatives differentiated relative to what at least three things the first thing is that a customer might choose to do business with the competitor they might choose to buy another brand or another product the second point of reference for a customer is that they actually might choose to do nothing status quo not making a decision not choosing is always a choice you might choose not to buy another car they’d have another television set or to buy a new home or to have to buy a new computer so the third point of reference very often particularly for technology companies is yourself because if I’m using say office 2003 I may not need to use office 2007 so paradoxically you actually have to differentiate yourself from yourself which is sometimes challenging so these are the three points of reference for in terms of differentiation a previous version of your own product it compared competing alternative or status school now these benefits that these claims of differentiation that you make need to be made to a specific target audience why is that because value is contextual values in the eye of the beholder there’s no such thing as objective value so when we talk about a promise of value we have to specify who is this for or type of customers or types of situations what types of scenarios is your product and service best designed for where is it find the best application for example McDonald’s has a lot of value for me in the situation when I need a quick convenient meal and I have children but on the other hand if I am going out for a special dinner then it’s a very different sense of values so at that point it’s even though I’m the same individual the context becomes important so value is contextual therefore you need to specify what context what target audience what scenario is your value proposition geared towards the final idea is that when you specify this differentiation you make claim now these claims need to be backed up by evidence so the final element of a value proposition definition is the reasons to believe or support and these are what sort of evidence can you provide to to back up your claims evidence can be objective features so for instance if you say that I have the world’s thinnest laptop then you have to actually define how thin it is in fact Dell just launched inch think thick laptop and that’s our objective claim then the second kind of different claim that you can offer or evidence that you can offer is a testimonial by customers and that is very powerful because customers are offering their own evidence the third kind of evidence that you can offer is third-party rating agencies JD power and so on and perhaps the least compelling claim justification you can offer is by providing your own evidence to support your own claim so you need to think carefully through what sort of evidence you’ll provide to back up your claims so in summary we define the value proposition as a promise of value that you make to a specific target audience that is differentiated from alternatives that customers might consider and is backed up by reasons to believe so that in summary is what we mean by the customer value proposition

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